A question that has existed for a very long time, and for many companies, is whether you should replace, customize legacy, extend (at high cost), or complement the existing project approval/tracking/reporting process within your company.  

For the remainder of this discussion we will refer to the project approval/tracking/reporting process as “Portfolio Management”. 

It is worth noting that while some will say Portfolio Management is much more than the items noted above, we will, in this case, use the term to highlight the current application requirements companies have in addressing their decision-making processes. 

There is no one decision or suggestion that is the right answer for all companies. The decision is typically unique to any organization and depends on where they are today with various systems and processes, and where they want to be in the future. This future state can be driven by their Digital Transformation roadmap or it can simply be identifying what is needed to expand decision-making requirements in the age of big data. 

The Portfolio Management process has increasingly become more complex, with legacy applications/systems generally not adapting well to the changes. Customers often request detailed information for project funding requirements, as well as enhanced cost tracking and reporting, before releasing funding for the various projects to be undertaken. 

Projects have typically been internal tasks in many organizations. But for so many others they have, and will continue to have, external facing aspects that are critical to their success. For example, many companies and/or industries will leverage project approval with their vendors or suppliers where funding is associated and tied to various projects.  

Likewise, many companies are requested to continually provide cost savings to customers in relation to various products, and these savings initiatives are partially funded or tied to contractual financial clauses. 

Companies are now being forced to change how they measure success with increased scrutiny, while still needing to issue timely reporting for every ongoing project. The Portfolio Management process, then, has evolved through many iterations and continues to change. Organizations have come under pressure to speed up the Portfolio Management process and improve decision–making on future projects based on lessons learned from past projects. 

A high-quality, well-managed Portfolio Management process is important for building confidence both internally and externally with outside vendors/customers. Historically, many companies instilled a variety of Portfolio Management processes to help perform these tasks, including: 

• Manual Spreadsheet Process – Over time, dozens or hundreds of spreadsheets are created in the “modern” spreadsheet solution, with no cohesive plan to guide design and interaction, and little to no governance on the mechanisms around them. 
• Obsolete Legacy Application – One major challenge for companies is that their legacy application no longer meets their needs and does not extend without considerable implementation costs and/or customization to accommodate. 
• Multiple Point Solutions that are difficult to integrate – Some organizations have multiple systems and must move data between these solutions. Then, they can manually collect and aggregate their output – usually through spreadsheets – to provide reporting for internal and/or external purposes. 

Regardless of the Portfolio Management process used in the past, none really provide a central data repository or a formal, consistent automated workflow and approval process. Workflow becomes too manual through email distribution, interoffice mail, or simply a walk from desk to desk to obtain approvals and signatures. 

Below are three highly contrasted Portfolio Management scenarios:  

Scenario 1 – Spreadsheets: Difficult to manage, manual, and lacking cohesion and consistency 

Many companies, independent of size, still conduct Portfolio Management using a completely manual system or spreadsheets. All controls, audits, and compliance activities are based on manual entry tasks and under the “assumption” that tasks have been carried out at the appropriate time and in the appropriate manner. This raises the significant chance of human error and outcomes are inherently let down by users being required to remember to do things. 

This scenario is understandably risky; with a high probability of errors due to tight deadlines, unstructured interaction of multiple employees, and disparate sources of data.  

While many larger companies may have the ability to have a financial analyst or finance team support the Portfolio Management process, they are usually operationally focused. These supporting tasks cannot detract from their core tasks (which are probably managing and ensuring a successful project life cycle) and significant pressure can ultimately result on these folks when asked to undertake even more duties on top of their regular day jobs. This can, of course, really detract overall motivation and even impact employee retention. 

Scenario 2 – Typical: Inefficient and lacking cohesive automation 

This is an environment where there may be some efficiencies with point solutions or legacy applications. Typically, companies have already automated certain Portfolio Management steps (which may be a high-maintenance environment depending on the age and robustness of the deployed automation) but still struggle with inefficiencies in the non-automated elements. 

Sharing of data between the various point solutions continues to present an ongoing integration challenge and usually includes some manual reconciliations and/or manual spreadsheet reporting tasks to accomplish a perceived integrated process. 

In this scenario, flexibility is not inherently available due to the possible disparate point solutions or the rigidness of the legacy applications. As expected, this means that “workarounds” are necessitated through an increasing number of ungoverned spreadsheets, emails, and other personal productivity solutions to fill the gaps. The old fallback of printing and manually approving many of these tasks using project tracking binders is usually a poor substitute for the automation of these tasks. 

Scenario 3 – Utopia: efficient, automated, integrated, and adaptable to new requirements 

The first question that one needs to ask is – how many companies have achieved this utopia in relation to Portfolio Management? Honestly, there is no way to even “guesstimate” this statistic, let alone produce a definitive number.  

Why? Because there are so many things that can be seen as relevant for Portfolio Management. There are Professional services organizations that generate nearly all revenue through various project assignments. There are automotive manufacturing companies that have projects assigned to creating a new product mold for a customer that will be used for manufacturing as a part. The list goes on and on and can impact every industry and every size company that exists in the modern world.  

In light of this far reaching scope, the statistical data size is truly astronomical and makes accurately tracking the adoption rate all but impossible. 

What could be said, given the potential population size, is that a very small number of companies have embraced and deployed an efficient, automated, integrated, and adaptable Unified Application to help with Portfolio Management. This level of speed and efficiency generally occurs with a unified solution which offers a high degree of flexibility and configurability, while fulfilling data reporting requirements. For those small few that may have this in place, the ROI (return on investment) on deploying such an application would be significant and provides a significant advantage versus competition. 

What does a Unified Application offer the two non-Utopian states? 

Legacy applications are often difficult and expensive to customize. For this reason, many shy away from this option. But it is an option. 

Many companies believe a lightweight system, built around spreadsheets but with enterprise-grade safeguards and workflow, can reduce implementation time and costs. This leads on to the belief that this will enable companies to retain application flexibility while additional capabilities can continue to be added through additional point solutions.  

True, this is definitely a potential choice. But keep in mind that if you decide to pursue this option additional costs, related to data reconciliation and integration between these point solutions, will be required. This also couples with the fact that reporting from multiple solutions forces you to remain dependent on spreadsheets and the risks that come with them. 

Another area where Scenario 1 and 2 may be restrictive relates to collaboration, workflow, and visibility into the project status. Every company should look carefully at which process and workflow areas can, or should, be automated and built into a solution. A general rule of thumb is the 80/20 rule: 80% of work should be available for automation while the remaining 20% should have the possibility of being automated. The automation of the remaining 20% will come with a higher cost and the need be done carefully, to ensure that the return on the automation effort outweighs the costs of putting the proposed automation in place. 

Instead of reinventing the wheel on possible options, let’s look at previous projects and research undertaken with companies we’ve worked with, to provide an overview of the options available: 

What efficiencies and best practices should be part of the Portfolio Management process? 

As noted earlier, the potential scope population that can be grouped into the Portfolio Management market is all–encompassing. Some efficiencies an organization can achieve through this automation include: 

• Standardized process – structured, uniformly applied, and consistently followed 
• Reduced level of manual intervention – needed for reconciliation and reporting requirements 
• Visibility into the process – not only while a project is being created and approved but also while a project is being changed and modified 
• Better project reporting – these are of actuals versus expected budget etc. and visibility into the differential on a more frequent and transparent basis 
• Standardized project reporting – across various projects 
• Automated Project Management activity – from budget to collaboration and reporting 
• Enhanced project–driven decision–making – including pre- and post-project completion analytics 
• Employee retention – ability to attract better talent and improved employee quality of life 

The value proposition can be much more significant than the items listed above, so it should not be seen as an all-inclusive list. 

We are not suggesting there is one decision that should be used by all companies, regardless of what area they are investigating from a system requirement point-of-view. But one item worth remembering is that people become fatigued and distracted, and experience a certain blindness to potential data issues, processes, or control omissions. A Unified Platform Application does not have this issue. 

Regardless of the decision your company takes, ensure all options are thoroughly researched and all areas of the business are included in the decision. 

Visit the Board website to find out more about the benefits of a unified platform on Portfolio Management and beyond.